Diesel prices raised by Rs 5 per litre

The government today increased diesel prices by Rs 5 per litre, limited sale of subsidised domestic LPG to six per year and reduced excise on petrol by Rs 5.30 per litre to avoid a price increase. Of the Rs 5 hike in diesel, Rs 1.50 will be on account of an increase in excise duty. Excise on diesel was cut in June last year from Rs 4.60 to Rs 2 per litre.

The increase in diesel prices comes after a gap of 14 months. The combined impact of diesel hike and cap on domestic LPG will reduce the under-recovery of oil marketing companies- IndianOil, Bharat Petroleum and Hindustan Petroleum by about Rs 20,300 crore this year, said a government statement. Consumers will pay market price (around Rs 750) if they consume more than six LPG cylinders in a year. Price of subsidised LPG is Rs 399 in the capital.

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However, gross under-recovery for the whole fiscal will still be about Rs 167,000 crore, significantly higher to Rs 138,541 crore incurred in the last fiscal. The above decisions were taken by the Cabinet Committee on Political Affairs in the evening.

After factoring in the local levies, diesel will now cost Rs 47 per litre in the capital from an earlier price of Rs 41.32 per litre. The under-recovery on sale of diesel during the fiscal even after this price hike is estimated to be above Rs 103,000 crore.

There will be “no increase in the price of petrol, although the current under-recovery on petrol is about Rs 6 per litre. The consequent loss to the OMCs will be offset through reduction in excise duty on petrol by Rs 5.30 per litre", the statement said.